EMCC European Monitoring Centre on Change

State guarantee for wages in case of insolvency

Norway
Phase: Management
Tipas:
  • Response to COVID-19
  • Income support for workers
Last modified: 20 November, 2020
Projekto pavadinimas::

Statsgaranti for lønnskrav ved konkurs

Angliškas pavadinimas:

State guarantee for wages in case of insolvency

Coverage/Eligibility

Employer bankruptcy, public administration of insolvent estates, compulsory liquidation and public administration of insurance companies or banks.

Main characteristics

In the case of bankruptcy, any outstanding pay and pay for the notice period, as well as any accrued holiday pay, are paid to employees by the state through a guarantee system. The scheme is administrated by the Norwegian Labour and Welfare System, NAV, and employees have to make a claim to NAV in order to get compensation.

The guarantee applies to all employees who are in an employment relationship where the employer is to pay social security contributions to the national insurance scheme. Self-employed and shareholders (who own at least 20% of the company) are not covered.

The following claims can be covered:

  • Pay (wages and other remuneration) for a maximum of six months. The pay claim must not have been due for payment more than 12 months before the bankruptcy proceedings commenced;
  • Holiday pay accrued in the same year as the final date of claim (i.e. when bankruptcy proceedings commenced in court) and the year before;
  • Pension benefits for a maximum of six months;
  • Compensation for lost remuneration for the performance of work for maximum six months;
  • Interest;
  • Reasonable costs linked to filing a petition for bankruptcy.

Maximum coverage is limited to a gross amount equivalent to two times the national insurance basic amount (about €20,000). Reasonable costs linked to filing a petition for bankruptcy are in addition to this. Claims are covered for maximum one month from the date on which bankruptcy proceedings commenced, even if a longer redundancy notice applies through agreement or by law.

Funding

  • National funds
  • Employer

Involved actors

National government
Legal framework and funding.
Public employment services
Administrated by the Norwegian Labour and Welfare Administration, NAV.

Effectiveness

For 2020, the scheme had a budget of NOK 945 million (€90.78 as at 31 August 2020), which was subsequently increased with NOK 40 million in response to COVID-19.  

The number of employees making claims under this scheme in 2013 was around 18,000, and the scheme paid out in total around NOK 820 million (€78.77 million). This was an increase from the previous years, a result of an increase in bankruptcies due to low oil prices.

Strengths

No information available.

Weaknesses

No information available.

Pavyzdžiai

No information available.
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